Podcast Summary: The Indicator from Planet Money

Episode: How a Former Fed Vice Chair Would Approach Rate Cuts

Release Date: December 9, 2025
Hosts: Darian Woods, Stephen Massaha
Guest: Lael Brainard (Former Federal Reserve Vice Chair)

Episode Overview

This episode navigates the turbulent waters of economic decision-making at a critical moment for the Federal Reserve. With official economic data delayed or canceled due to a recent government shutdown, the Fed faces its most consequential policy meeting of the year—choosing between keeping interest rates high to combat inflation or lowering them to support jobs. Former Fed Vice Chair Lael Brainard provides a rare insider’s look at the decision-making process and shares her approach to rate cuts under unprecedented uncertainty.

Key Discussion Points & Insights

1. The Fed’s Dilemma Amid Data Shortages

• [01:20] Setting the Stage: Economic indicators crucial for the Fed's decisions have been delayed or canceled following a government shutdown.
• Jerome Powell’s Analogy: “If you’re driving in the fog, you slow down.”
  (Cited by Darian Woods at [01:34])
• The Fed’s meeting is likened to hitting a T-intersection:
  • One direction: "Hawk’s Highway" (higher rates to fight inflation)
  • The other: "Dove’s Drive" (lower rates to boost jobs)
    ([01:36])

2. Inside the Fed: Decision-Making Under Uncertainty

• [04:00] Lael Brainard shares the Fed’s rituals:
  • “Everybody gathers for coffee and donuts in the morning, and every person sits around this massive table and they each have their own time to make an observation about what they're seeing in the economy.” ([04:08])
• Fed members listen intently to each other, especially when official data is missing.
  ([04:24])

3. The Challenge of Delayed Data

• The shutdown means:
  • CPI (Consumer Price Index) for October canceled, November delayed
  • Latest jobs report outdated
• Brainard:
  • “So right now, with that data being so lagged at a moment where the economy is really pulled between these opposing forces… you really want up to date data.” ([04:59])
  • AI is changing investment and job prospects, complicating the picture.
• On missing critical data:
  • “It would be great to have the most recent data instead of 2 month old stale data to try to make those decisions.” ([05:43])

4. Making Decisions with Partial Information

• Even with current data, understanding economic turning points is intrinsically difficult.
  • “The data always feels a little bit like driving, looking into the rear view mirror because it is inherently backward looking… even with the most recent official statistics.” ([05:54])

5. Alternative Data Sources and Private Intelligence

• Without fresh government data, Brainard would:
  • Rely on frequent calls and meetings for real-time information
  • Seek private-sector data (e.g., ADP, Revelio Labs) and consumer sentiment surveys
    ([06:35], [06:54])
• “People are much more worried about job security than they were even a year ago.” ([07:08])

6. Brainard’s Policy Recommendation: The “Hawkish Cut”

• Pressed on how she’d vote if on the committee:
  • “I do think it’s important for the committee to bring inflation to 2%... On the other hand, we don’t want to see the economy go into a downward self reinforcing spiral… So I would probably on balance favor one more cut and then holding for a period of time, but with a very firm commitment to getting inflation to 2% over the next two years.” ([07:21])
• Darian calls this a “hawkish cut.” ([08:08])
• Brainard agrees: “That I think would be the right way to describe it.” ([08:10])

7. The Real Source of High Prices & the Limits of Rate Cuts

• Cutting rates focuses on jobs; inflation remains Americans' top concern
• Brainard:
  • “Affordability is the critical challenge for American households. Electricity’s more expensive, healthcare is becoming incredibly expensive, groceries have become more expensive. Then of course we know housing has been challenging for some time.” ([08:34])
  • Notes that many causes of high prices—such as housing shortages and tariffs—are outside the Fed’s control; require action from executive branch
    ([08:34]–[09:20])

8. High Prices vs. Rising Prices

• Stephen Massaha summarizes:
  • High prices aren’t always the same as rising prices; not all inflation is from monetary policy
  • For some, the pain is due to ending subsidies or tariffs rather than general inflation ([09:20])

9. Uncertainty Still Reigns

• Darian Woods:
  • “Would you say that now it’s like looking in the rearview mirror that is also foggy?” ([09:43])
• Brainard concludes:
  • “Well, either that or, you know, a very imprecise rear view mirror.” ([09:53])
• Whether the Fed makes the right decision will only become clear in hindsight. ([10:00])

Notable Quotes & Memorable Moments

• Jerome Powell (via Darian Woods, [01:34]):
  “If you’re driving in the fog, you slow down.”
• Lael Brainard ([04:08]):
  “Everybody gathers for coffee and donuts in the morning and every person sits around this massive table and they each have their own time to make an observation about what they're seeing in the economy… People listen to each other even when they disagree.”
• Lael Brainard ([04:59]):
  “At a moment like this you really want up to date data.”
• Lael Brainard ([07:21]):
  “So I would probably on balance favor one more cut and then holding for a period of time, but with a very firm commitment to getting inflation to 2% over the next two years.”
• Lael Brainard ([08:34]):
  “Affordability is the critical challenge for American households… a more complicated set of solutions, I think are really important there, and they really sit with the White House, with the executive branch.”
• Lael Brainard ([09:53]):
  “Well, either that or, you know, a very imprecise rear view mirror.”

Segment Timestamps

| Timestamp | Topic/Segment | |:-------------:|-----------------------------------------------------------------------------------------| | 01:18 | Show introduction and context: missing government data | | 01:20–02:17 | The Fed’s policy dilemma: "Hawk’s Highway" vs "Dove’s Drive" | | 04:00–04:34 | Lael Brainard describes Federal Reserve decision process | | 04:41–05:50 | Brainard on the challenges of missing critical government data | | 06:35–07:08 | Using private sector and alternative data sources | | 07:21–08:10 | Brainard’s recommendation: one more cut then hold, “hawkish cut” defined | | 08:34–09:20 | Brainard on the source of high prices and role of policy outside the Fed | | 09:43–09:53 | Metaphor of “a foggy and imprecise rear view mirror”—uncertainty at the turning point | | 10:00 | Episode wrap: true impact only clear in hindsight |

Summary

This episode delivers a concise but fascinating window into how the Federal Reserve processes decisions when flying blind—lacking data, grappling with inflation and jobs, and facing new economic forces like AI. Lael Brainard’s perspective as a recent vice chair brings both candor and humility: she calls for a cautious, data-driven “hawkish cut” in rates, but acknowledges limits to what the Fed can do. With high prices front of mind for Americans and official data in short supply, the episode captures the uncertainty and complexity at the heart of modern economic policymaking.